Factory output falls sharply

The UK's manufacturers experienced declining output in the three months to October, posing yet another threat to hopes for a recovery within the industry, official figures reveal.

Latest analysis from the Office for National Statistics (ONS) shows that overall production decreased by 1.1% compared to the three months to July.

On a monthly basis, output fell 0.7% between September and October, notching its third month in decline and at the sharpest rate in seven months, the ONS said.

Of the 13 subsectors polled, mining and quarrying took the deepest plunge, falling 6.7% compared to the previous three months and dropping 8.5% on the year.

Food, drink and tobacco and pulp, paper, printing and publishing also took significant dives in the three months to October.

The industry had pulled itself out of technical recession earlier in the year, and subsequent surveys from varying organisations suggested that manufacturers were on their way to recovery.

The impact of rising fuel costs and their difficulty in passing them on to customers, however, have hampered factories' ability to maintain any significant revival.

"The manufacturing sector's acute, underlying weaknesses, and the risks to the economy highlighted in yesterday's Pre-Budget Report, reinforce our view that the authorities must act forcefully to prevent a worsening in the economic situation," said David Kern, economic adviser to the British Chambers of Commerce (BCC).

Kern urged the Bank of England's Monetary Policy Committee (MPC) to cut the national interest rate; though, he acknowledged this is unlikely to happen when the MPC meets this week.

"The financial markets do not expect a repo rate cut on Thursday, but we strongly urge the MPC to act without undue delay," Kern said.

"The economy is weakening, and confidence is faltering. Alleviating the plight of manufacturing, and countering the downward pressures on the economy, are now key priorities."